The US e-book market in 2014 - the Nielsen view

Nielsen’s analysis of the US book market, presented at Book Expo America, shows that e-books have helped stabilise the industry during a time of economic...

Nielsen’s analysis of the US book market, presented at Book Expo America, shows that e-books have helped stabilise the industry during a time of economic upheaval - but it also reveals that e-book growth has halted for major categories such as adult fiction and adult non-fiction. But while the digital sales trajectory has dimmed for the major publishers, its overall impact on the sector remains undiminished.

Using data both from Nielsen BookScan (which tracks print book sales, but not digital sales, from sales made through retailers) and figures from its PubTrack Digital service (which collects e-book sales data from over thirty of the largest publishers in the United States), Nielsen contends that the decline in physical book unit sales (from 718m in 2010 to 635m in 2014) has been offset by the rise in e-book business (from 68m unit sold in 2010 to 223m by 2014).

E-books as a proportion of the market hit a high point in 2013 of 28%, and overall the US book market has risen at a compound annual growth rate of 2% over five years. As Nielsen puts it: “The physical CAGR = -3% has been offset by the e-books CAGR = 35%”.

In pure units sold, in 2014 858m books were sold in 2014, compared with 785m.

Nielsen also provided a five-year summary of e-book sales, based on the invoices of its major publisher clients. The stand-out figure, as reported at The Bookseller earlier this week, is that e-book volume sales fell 6% in 2014, compared to 2013. The actual numbers were 237,406,910 in 2013 against 222,985,471 in 2014, so a 6.1% drop in volume terms.

According to Nielsen the e-book curve looks something like this: “In 2010 PTD tracked 68 million unit sales . . . One year later it was over 160 million, and in 2013 unit sales equaled almost 240 million units. However in 2014 overall unit sales were down 6%. This resulted in a 2012 - 2014 CAGR of only 3%.”

Some have queried as to why the figures don’t match with the data provided earlier in the year by the Association of American Publishers, which reported e-book sales up 4.7% year-on-year to $1.58bn. The AAP bases its report on more than 1,000 US publishers, though since, like the UK, the big US publishers account for a huge proportion of the overall books market and all of the major players are included in this sample (Nielsen says it covers 85% of the e-book market), the panel is unlikely to be the reason why one measure is down, the other up.

The simpler reason is that one is based on volume, the other on value—and that in itself signals a shift in the market, and how we must now think about it. It seems likely that, as we saw in the UK, US publishers are now prepared to eschew volume market share and instead focus on value sales, i.e. higher value sales at the expense of the number of units shifted. Other reports, such as those put out by Author Earnings, have suggested the same phenomenon, but while AE sees this a a weakness, it may simply be a strategy that will become further pronounced as the big publishers move back to full agency.

There could be a number of reasons why traditional publishers are adopting this strategy:

First, they simply don’t believe Amazon when it says that lower price points guarantee greater volumes that offset the decline in price, an argument it raised during its dispute with Hachette Book Group USA last year;

Second, either way they don’t they can counter what threat there is from self-published titles by trying to price-match them - it’s a battle they can never win since their overheads will always be much greater;

Third; their own experimentation has shown that consumers are simply not as price sensitive as has been suggested. The Girl on the Train, a massive UK e-book bestseller has been priced at around £6 for much of its success;

Last, they believe a mix of print and digital remains the most helpful balance for the overall marketplace, allowing high street booksellers to survive while curbing the growth of Amazon.

There are other nuggets in the Nielsen data:

* adult fiction e-book volumes have risen massively since the turn of the decade, but since 2012 growth has slowed, andin 2014 adult fiction e-book sales fell 9%, so they are now only marginally ahead of 2012’s figure;

* but, in general fiction, romance, suspense, mystery , fantasy more than 50% of unit e-book sales are digital;

* in adult non-fiction e-book sales has “stopped” - though in reality they grew by 0.5% but are still only 15% of total sales;

* sales of juvenile e-fiction are on the rise: the last three years show a 12% CAGR, and in 2014 juvenile fiction e-book sales grew 10%;

* on average, book buyers have bought 5.3 books in the past 6 months, 45% of which are e-books. However, those who buy only eBooks buy more than twice as many as those who only buy print;

* if an e-book and print book are the same price, 32% of respondents to Nielsen’s consumer panel were more likely to buy the print book, 31% were more likely to buy digitally;

* e-books are less seasonal, this past December e-book sales were roughly 20% the size of physical sales, in November of 2014, they were roughly 33% the size of physical sales, and in October 2014, they were 40%. While print book sales peak during holiday seasons, e-books do not - and even the post Christmas surge has become less pronounced.

* people who buy print and digital spend more each month ($37.63 than those who buy just e-books $18.70);

* when asked, “Which of the following have you done in the last 6 months” 64% of respondents bought one or more books or any kind – while 10% took out a book subscription. But AmazonPrime (as well as Kindle Unlimited) are the prime movers;

* as will no doubt shortly be noted in the comments section (or on Twitter), Nielsen’s analysis tells us less about the overall e-book market in the States than we’d like, primarily because it doesn’t include sales from self-published — or non ISBN publishers — or as Hugh Howey would have it the "35%+ of the ignored/silent market". Nielsen does give some indication that it is aware of this grey sector, reckoning that 42% those who have downloaded e-books are sure they have bought a self-published book. I don’t know how useful that knowledge is, except that it perhaps indicates how widely accepted self-published writing now it (but we knew that anyway, right?). However, as with previous surveys it seems likely that our understanding of the overall e-book market would improve considerably were good data available from this sector.

Philip Jones

I am editor of The Bookseller, and co-founder of FutureBook.net. I joined The Bookseller in 1996 under its then editor Louis Baum, and also worked for the magazine under two previous editors, Nick Clee and Neill Denny. I live in north London with my partner, and three children – Henry, Robin and Elijah.